Updated from 7:19 a.m. EST

A much-anticipated $100 million settlement with Millennium Partners will reveal that abusive mutual fund trading was no small secret at the $5 billion hedge fund.

The settlement with securities regulators, which could be announced as early as Thursday, will blame Israel Englander and at least two other top executives at the fund for letting the trading occur, say people familiar with the investigation.

Englander, the storied Wall Street trader and buyout specialist who founded Millennium, is expected to pay a portion of the fine assessed against the hedge fund by the Securities and Exchange Commission and New York Attorney General Eliot Spitzer, sources say.

In settling with Millennium, sources say, regulators also will point an accusatory finger at Terry Feeney, Millennium's chief operating officer. Sources say Feeney, who declined to comment, is also likely to pay a fine as part of the settlement.

Regulators also are expected to criticize the actions of Fred Stone, Millennium's general counsel, who joined the hedge fund in 2000, after serving as general counsel for the American Stock Exchange.

Five months after Millennium's name became associated with the mutual fund scandal, the hedge fund shook up its legal team. The fund brought in Simon Lorne, a former SEC general counsel, to serve as vice chairman and chief legal officer. In the new management structure, Lorne became Stone's supervisor.

Tom Daly, a Millennium spokesman, declined to comment on the settlement, which has been in the works for several months. Harry Davis, Millennium's outside attorney and a partner with Schulte Roth & Zabel, could not be reached for comment.

The settlement documents will make clear that Steven Markovitz, a former senior Millennium trader, was no rogue operator and that his abusive mutual fund trades were countenanced by the hedge fund's leaders, sources say.

In March 2004, TheStreet.com reported that Millennium employed a sophisticated strategy to profit from abusive mutual fund trading. One thing the hedge fund did was develop a strategy for market-timing stocks held in variable annuity insurance contracts -- which are mutual fund-like investment products.

Markovitz pleaded guilty in October 2003 to engaging in illegal late trading of mutual fund shares. The former trader, whose guilty plea came in the early days of the mutual fund trading scandal, has yet to be sentenced. Markovitz declined to comment on Tuesday.

In fact, the settlement with regulators also will identify another Millennium trader who allegedly engaged in abusive mutual fund trading. The trader is expected to pay a fine and accept a one-year suspension from the securities business.

The settlement with Millennium, which comes more than two years after the mutual fund trading scandal first made headlines, is the second involving a hedge fund. Millennium set aside money to cover the cost of a settlement back in December 2003. Sources say settlement talks are going on with at least two other hedge funds that engaged in abusive mutual fund trading, but neither is still active and the funds weren't as large as Millennium.

The other hedge fund to pay a fine in the mutual fund scandal is Canary Capital Partners, the defunct shop led by Edward Stern. Stern's $40 million settlement with Spitzer in September 2003 launched the mutual fund investigation.

Two years later, the investigation is in its final stages, with just a few big cases still to be resolved. To date, regulators have collected nearly $3 billion in fines and restitution from dozens of mutual fund companies, brokerages and hedge funds.